Brulé T.C.J.:
1 These appeals, heard on common evidence, result from reassessments by the Minister of National Revenue (the “Minister”) wherein he disallowed the treatment of profits from four properties sold by the male Appellants and two of the four from the appellants' spouses.
Facts
2 During 1987, the Appellant, Mario Iaboni, disposed of his interests in a real estate property located at 110-114 Queen Street, Brampton, Ontario and 11 Fourth Avenue, St. Catharines, Ontario.
3 During 1988, the Appellant, Mario Iaboni, disposed of his interests in two additional properties located at 135 Hartzel Road, St. Catharines, Ontario and 6 Blue Jay Avenue, Brampton, Ontario.
4 With respect to 110-114 Queen Street, this was commercial property which had been tenanted.
5 With respect to 11 Fourth Avenue, attempts were made to re-zone this property for commercial use, but were ultimately proven to be unsuccessful.
6 With respect to 135 Hartzel Road was a commercial property for which problems were experienced with the tenant who moved to California.
7 With respect to 6 Blue Jay Avenue, this property was purchased with the intention of the Appellant's children residing there, but ultimately did not occur.
8 When each of the above properties were sold the Minister considered the profits on income account and not capital gains as alleged by the Appellants and assessed each with his or her share of the profits as income.
Issue
9 The issue is whether the dispositions of property were each on account of income or capital.
Analysis
10 The Minister alleged that at the time of acquisition of the Queen Street property, Hartzel Road property, Fourth Avenue property and the Brampton property, the Appellant and/or his partners had in mind the possibility of resale at a profit and that possibility was an operating motivation for the purchase of the properties.
11 It would seem that this group of investors who lacked adequate capital, as the evidence revealed, really always intended to hold on to the properties they acquired. The profit from one led to the acquisition of the next one and so on, but each time there was some reason to sell without the need to report the sale on account of income. The Court believes there was always a secondary intention of sale if matters did not work out. The presence of a real-estate agent close to the Appellants is indicative of their acquiring a knowledge of the market and the possibility of sale after a purchase was made. For example the Hartzel Road property was sold only some three months after purchase.
12 The result is that the Court finds as the Minister indicated and the appeals are dismissed.
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